4 Reasons to Buy Nvidia Stock, Give Up After Its Latest Pullback

I was right Nvidia (NVDA 1.51%). And I was wrong too.

Earlier this week, we predicted the stock would rise after the fiscal 2Q25 update on August 28 for three key reasons: breakout numbers, stellar guidance and clarity on the launch of the Blackwell platform. Nvidia actually reported blowout numbers in Q2. He provided stellar guidance. The company also provided more information about when it will start shipping the Blackwell.

However, Nvidia shares did not rise despite all this good news. In contrast, the stock fell 6% on the day after the Q2 update.

Should investors buy Nvidia stock surrender after its latest pullback? Here are four reasons why the answer could be a resounding yes.

1. Blackwell is coming soon

Nvidia CFO Colette Kress said in the company’s Q2 earnings call that the Blackwell platform will ramp up production starting in the fourth quarter of fiscal 2025. She added that Nvidia expects Blackwell to generate “several billion dollars” in revenue in Q4. Kress noted that demand is outstripping supply, a trend that should continue next year.

CEO Jensen Huang clarified that Nvidia will start shipping Blackwell in Q4. He praised Blackwell’s capabilities and claimed it “will be a complete industry changer”. Huang pointed out that Blackwell is not just a graphics processing unit (GPU); is “an AI infrastructure platform” that offers 3x to 5x more AI throughput than Nvidia’s Hopper platform.

Some investors may have been disappointed that Nvidia missed its “whisper” earnings number in Q2, despite beating official Wall Street estimates. However, I suspect Blackwell’s release will soon erase those doubts.

2. The $1 trillion data center migration

It’s important to note why Blackwell and future innovations are so critical to Nvidia’s success. A massive data center migration from CPUs to GPUs is underway. As Huang said on the Q2 call, “$1 trillion worth of data centers in a few years will all be accelerated computing. Historically, there are no GPUs in data centers, only CPUs. In the future, every data center will have GPUs. .”

However, don’t look at this as an opportunity for Nvidia that is in the future. Huang noted that the company expects its data center business to grow “quite significantly next year.”

3. The next generation of generative AI is at hand

One of the reasons data centers need powerful GPUs is that the next generation of generative AI is within reach. According to Huang, “The world of human-made software is moving towards generative AI software.” He noted that Nvidia already uses AI generative coding “pretty extensively.”

But while the use of generative AI in coding, chatbots and imaging is accelerating, Huang argues that this is “only the tip of the iceberg”. He mentioned several other areas that generative AI is transforming, including ad targeting, large-scale recommendation systems, robotics and search systems.

Importantly, training next-generation AI models will require 10x to 20x more computing power. This creates a huge growth market for Nvidia, one that the company is capitalizing on.

4. Nvidia plans to buy its shares out of hand

There’s at least one other reason to buy Nvidia stock after the recent pullback: The company plans to buy back its stock first. Nvidia’s board of directors approved a $50 billion share buyback authorization. This is in addition to the $7.5 billion remaining in the existing share repurchase authorization.

Sure, the total value of authorized share buybacks represents less than 2% of Nvidia’s market cap. However, the increased authorization underscores the board’s belief in the company’s future growth prospects. With Nvidia poised to bet another $50 billion on itself, it could give investors much less money to buy the stock with more confidence in their decision.